Ombudsman cuts use of lawyers

The Fair Work Ombudsman plans to reduce its use of external lawyers for civil litigation after the federal ­government gave it an exemption from directions requiring the use of law firms for a year.

The ombudsman will be allowed to make much greater use of its own, cheaper legal staff in a move that could be imitated by other federal departments and agencies.

Firms among those on the ombudsman’s legal panels that could lose fee revenue are Clayton Utz, Corrs Chambers Westgarth, DLA Piper, Freehills, Gadens, Minter Ellison and Norton Rose, as well as the Australian Government Solicitor.

Chief counsel at the ombudsman, Janine Webster, said the exemption was sought to help slash its annual legal budget and “improve the stock of lawyers we have here".

“Our lawyers have actually been doing a lot of this work in-house for some time and just running it through as a second check, if you like, by the firms," she said.

“We have found over time that they are actually spending time training up the external legal providers about how our matters are conducted."

The ombudsman was given a broad 12-month exemption from the legal services directions from July 1, which requires most federal departments and agencies to use external firms when commencing court proceedings, preventing departments from briefing barristers directly. These departments spent $254.9 million on external firms in 2009-10.

Federal Attorney-General
Robert McClelland
allowed an exemption for the use of government lawyers to run employee underpayment cases in 2008. This exemption has now been broadened to apply to all of the ombudsman’s cases.

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The ombudsman cut its budget from more than $5 million in 2009-10 to $3.8 million in 2010-11, partly as a result of its initial, limited exemption.

Ms Webster said savings should now continue, as it would be about half as expensive for its own lawyers to brief barristers directly, rather than go through external firms.

In-house lawyers cost $150 an hour, but external lawyers ranged in cost from $303 to $515 for a partner.

Ms Webster said panel firms would still be used if internal legal expertise was lacking, but she expected this expertise to grow over time.

Mr McClelland said in March he planned to introduce reforms to the way departments procured legal services by October, including a whole-of-government multi-use list of law firm and barrister advisers and expert panels in specialist areas.

His department met yesterday with government and industry to discuss the reforms.

Federal agency Comcare, which oversees workplace safety, rehabilitation and compensation, is set to join the ombudsman’s panel arrangements from August 1, Ms Webster said. The Australian Building and Construction Commissioner has also applied for a similar exemption.

Ms Webster said she would tell panel firms this week they must now tender for litigation work on a fixed-fee, rather than billable-hour, basis.

“This is an approach which Comcare will also be looking for as well when it goes to our panel," she said. “Again, it is about trying to get as much bang for our buck as we can."